October 22, 2004

Before reading this article, you may want to review where surpluses really come from, a pattern that neither politicians nor media lunkheads want you to know about. It explains many things, including Senator John Kerry's claim that Bush has squandered a $5.6 trillion surplus the democrats left him.

In the afternoon of Thursday, October 14th, one day after the final debate, the U.S. Treasury issued its final Monthly Report for fiscal 2004 that ended on September 30th. This report provides a summary of fiscal 2004.

One of the neat things this report provides is the basis to figure out how much surplus there was from payroll taxes that went towards Social Security:

This is all money that the federal government took and spent elsewhere. Pretending that they merely "borrowed" and/or "invested" it, that they can both spend and save the same money, they then put special obligation nonmarketable bogus bonds in the Social Security trust fund which we'll get to in a moment. The table above represents raw cash stolen.

As you can see, the overpayments every worker in America made to Social Security were considerably less in fiscal 2004 than they were in previous years. In fact, during the last year they've been almost $11 billion less than in 2003 and that wasn't a good year either, nothing like what the government enjoyed when Bush took office in 2001.

This is a pretty good indication of what is happening to our work force. It means that a great many people are either unemployed, probably because their jobs were "outsourced" overseas, or that many have been forced to take jobs that pay considerably less than they were making a few years ago, and possibly that a considerable number have simply dropped out of the labor market. The latter could be spouses that decided to stay home and do without many luxuries. And, of course, it could be a combination of all these factors and some rather nefarious activities by large and small independents who can work for cash.

No matter how many factors might be causing this drop in revenue, it's certainly not what George W. Bush wants us to believe. If the last year had resulted in more people working, a larger and well paid work force, this surplus in payroll taxes would not be falling – it would be rising. Chalk up another lie from the lips of our current President.

The table above doesn't come directly from the Treasury's Monthly Report. What you get from the report is the increase to the Social Security trust fund which is really the combination of the Federal Old Age & Survivors Insurance and the Federal Disability Insurance trust funds. This trust fund went up $151,179 million (152 billion) in fiscal 2004, bringing the combined trust to a total of $1.635 trillion at the end of the fiscal year.

A good chunk of this total is interest that the government handed the trust without any money whatsoever involved. They simply give the trust more bogus bonds, but it allows them to continue the fiction that they didn't steal your retirement money – they just "borrowed" it. It's very important to the pirates to do this or their "borrowing" story falls apart.

The Treasury figures this interest payment, which is paid in half twice a year first in December and then in June, against the balance at the end of the previous fiscal year which was $1.484 trillion – one trillion, four hundred and eighty-four billion.

The rate is decided on the basis of a five year model of the interest they've paid on real Treasury securities sold to legitimate investors – honest borrowing. In fiscal 2004, the interest was 5.4 percent even though interest rates on new issues were relatively low.

Am I confusing you? Don't worry, the mathematically challenged word merchants of what passes for news in this country usually think that if the Social Security trust fund went up $152 billion then that’s how much money workers contributed. Here's what it really looks like:

The interest will continue to grow at fantastic multiples even if the surplus drops to almost nothing or levels of 1994. In other words, workers could stop paying payroll taxes altogether and the trust fund would still continue to grow. That's the nature of compounding interest.

What's more, this is all money we are someday going to be forced to redeem in a form of double taxation plus interest. The Social Security trust fund is presently 22.2 percent of the national debt and even though the pirates would like you to believe that this is money that "the government owes itself" or that one department owes another (Intra-governmental Holdings) that's just another lie. It's all a scam.

Whatever arguments the pirates have in defense are belied by the fact that they do the same thing with at least 22 other entitlement accounts including Medicare and their own Federal Employees Retirement System (FERS).

President Bush has said that reducing or eliminating the tax on capital gains is justified because it's "double taxation." Corporations pay income tax so investors should not be taxed again on their dividends. How's that for a comparative stretch of the imagination? It's like saying you shouldn't pay sales tax on a used car because the tax has already been paid by the original purchaser.

All the federal government ever had to do was STOP STEALING THE MONEY. That's the first step and we've wasted years talking about "lock-boxes" when every real trust fund is already a lock-box.

As a member of the Senate Finance Committee, John Kerry knows exactly how this works. And Bush, who got his idea for "personal accounts" from his father's Thrift Savings Plan, knows that he can't make his case without admitting that there's a surplus. They are both caught on the horns of a dilemma, so they say nothing. And they won't do anything about the rip-off either.

In fiscal 2004, American taxpayers already paid $25 billion in double taxation plus interest from other entitlements. See how many entitlement trust funds were drawn down in fiscal 2004.

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